All Forum Posts by: Daniel J Jackson

Transfer to a state school and get a degree for free. 

Buy a house hack and rent to your friends. Get paid to go to college. 

Learn things that you want to learn. Create your own major.

What skills will make you better at real estate that you can learn in college? Numbers, business, communication skills, how to scale a business, etc, etc.

College is not the solution, but it is a great way to train. It's not either/or. It's both. It's not degree or experience, it's both.

You can still invest in REI and go to college. Telling yourself to drop out because its 120k is a way to "rationalize" leaving. You can become a real estate agent in a summer. Sell to all your college buddies.

Just my take.

Thanks all for these very helpful comments.

Here is the update: the place is a duplex and we finished remodeling one side thus far.  We chose the tenants with no pets!  They dropped off deposit same day and they are chuffed.

The other candidates were also really wonderful (granted, not as strong as the first people but still leaps and bounds better than third place candidates), so we offered the other side of the duplex to them.  We will be remodeling that next, and will keep in mind that there are pets as we do so.  They will move in about 3 months from now.  This option allows us both to stop searching.

So, long story short, looks like we didn't have to chose after all since we will be getting both tenants!

I hear all the concerns about the cat.  I am going to make sure both animals are spayed and neutered and have up to date vaccinations.  We do require rental insurance of $300,000.  I will also make clear that their deposit would go towards any damage caused by the animals.

Vinyl plank laminate is great if there is damage as quite easy to replace sections.  The cabinet scratches are more of a concern.  I will need to monitor and maybe put some version of a scratch-guard?  The pee smell is biggest concern.  Need to monitor that closely.  I don't think I can really mandate where they put the cat litter (but I hope it will be either outside or close to back door).  Maybe I can offer to install a "doggie door" in the back?

Thanks all!

All great thoughts. Thank you.

@Account Closed I really appreciate that thought.  I need to confirm with them, when we sign the lease, that their deposit is still up for grabs when it comes to repairs needed due to animals (ie. that the pet rent does NOT cover that).

The candidates with the pets say they want to stay 3 years.  The others are a toss up, but I would predict 1-2 years since they are in a better position to buy in the near future.

Hello all:

I just finished rehabbing one side of a duplex and have two great tenant candidates.

OPTION A: Will pay $1,250 and has no pets.  2 adults and 2 young kids.  Great all around.

OPTION B: Will pay $1,250 + $75/mo for the two pets (a gray house cat and a lab/retriever mix). 2 adults and 3 kids (one 2 week old baby).

Which would you choose?

I like the idea of additional income of $900/year, but of course worried the pets will cost me more than that?  I will also have a deposit on hand of $1,250 (one month), so that can also protect me against pet damage on move out.

I am inclined to go with the people with pets, but I just finished this remodel and it looks nice, so I might be having an emotional reaction to animals messing it up?

Floors are vinyl plank laminate throughout.  Baseboards were cheap and easy to replace. What else should I be worried about?  How hard is cat smell to eliminate?

Thanks.  Open to any feedback.

Daniel

I'll be there and looking forward to connecting with folks.

Thanks Scott! Looking forward to it. Lots of questions for next guest.  Would love to hear from a great property manager. Anyone know a star we could invite to speak with us?

Looking forward to it.

Thank you all for this useful feedback.  

I think I have ruled out the HELOC based on likelihood of rate increases and not being able to write off the interest under new tax plan. The HE Loan also may not allow for write-offs, but at least it's a fixed rate and term. Also, since the duplex I am offering on does not need massive improvements, there is not much room for me to refi the duplex soon and pay back a 2nd lien. Therefore, I would be paying it off from W-2 income, and doing so on a fixed term makes it less volatile.

My top choice is probably to refinance the home I am exiting.  However, I am not sure if I will be able to do this AT THE SAME TIME as I take the new loan for the duplex? 

In another post, Zack Karp told me that the above was possible, but it would need to be a rockstar loan officer.  Does anyone how this works?

@Harjeet Bhatti  Can you please explain your comment of "you can ask your lender to keep the same amortization table. You don't have to add those years in your mortgage payment."   

-Do I have to stay with the same lender to do this? (I am considering refinancing with a different broker)

-If I "keep the same table" then I just start from where I left off?  So, I am on year 4 of a 15 year note, does that mean I would go to year 4 of a new 15 or 30 year note?

@Kris Wong Thanks for suggesting the idea of selling the home. However, given the appreciation I have seen in the last few years and the development going on in my area, I expect it to continue appreciating. Also, since I am already 4 years into a 15 year loan I could see renting it until it's paid off. On current loan it would basically break even. Or, if I refi it to a 30-year it will then cash flow after expenses and, most importantly, allows for future leverage/HELOC as I plan for future investments. Please correct me if my logic is off!

BP community!

Reaching out with a question about best options for financing.  

Working to find a house-hack duplex in Austin, TX and planning to go conventional with 15% down.  I am considering leveraging our primary home to do so.  It is currently on a 15 year note and if I have about $45,000 in equity sitting in it.  What are the pros and cons of each of the below three methods for accessing this?

1. Cash out Refinance: 

PRO: Keeps everything together (HELOC and HEL create a 2nd lien)

CON: Starts a new loan, so has closing costs and you go back to the beginning of the amortization table, so more money to the bank.

2. HELOC

PRO: Low monthly payments.  Avoid closing costs. Keep my current 1st loan on 15 year term chugging along.

CON: Might take a long time to pay it back and unless the duplex can later be refinanced at a higher value, it will be harder to put this money back.

3. HE Loan

PRO: Fixed term and interest rate.  Avoid closing costs. Keep my current 1st loan on 15 year term chugging along.

CON:  Creates a 2nd lien with a higher payment, so always risky if payment gets tough.

Open to your feedback.

Thanks!

Daniel

@Zack Karp

Thank you Zack!  You hit the nail exactly on the head.  The main issue is that, given that we are only moving 20 miles away, we cannot use the rental income from our current home (which we will keep and rent out) in order to offset the mortgage payment on it.

There seem to be two options to move forward:

a) Qualify even with this liability (I may qualify to carry both mortgages)--this option is not ideal because, if I am understanding correctly, this will make it harder for me to qualify for future loans.  We are planning on going 50/50 on a home with a family member later this year, and I worry I would be maxed out by this point and have a hard time qualifying.

b) Come up with 15% and go conventional.  Either:

i) Do a cash out refinance, like you suggest.  Can you explain a little better how this works?  Is there a max?  The home is worth about $195K and we owe $105K.  It's on a 15 year term.  It would rent for $1500. Do we refinance to a new 15 year?  Move to a 30 year? I guess I would want the payment to equal about 75% of rent so that it does not count against me?

ii) Take a HE Loan on current home. $40K HE Loan would come in about $900/mo payments. I could afford this given my lower payments on a duplex (about $1900 PITI with an $1100 rent, that leaves me with $800 to pay for my side, so I can absorb the additional $900, for a total "payment" of $1700).